Korean tech businesses face growing threat from patent troll attacks

Korean tech businesses face growing threat from patent troll attacks

by Pranali Mehta

Though the Covid-19 pandemic has elevated South Korea’s tech earnings to new highs amidst a growing demand for at-home entertainment and communication hardware, it has also fueled a rising threat from patent trolls.

Patent exploitation firms have been purchasing intellectual assets from businesses struggling to cope with the pandemic and utilizing it as a weapon against Korean corporations.

The strategy these patent exploitation firms adopt is labelled as the ‘file-and-settle’ approach, wherein the targeted organizations often opt to avoid a lengthy and expensive court battle, even if it is clear that they are most likely to win.

Consequently, they are choosing to settle a growing amount of patent lawsuits during the early stages of the legal process, especially in the USA, which is home to the world’s largest tech market.

Over a period of five years up until March 2021, 72% of 809 patent disputes concerning South Korean corporations, where most of them were defendants, were settled either during or before pretrial proceedings, including discovery. As per the data provided by the Korea Intellectual Property Protection Agency and the Korean Intellectual Property Office, merely 4% of cases went all the way to a legal ruling.

Nonperforming companies, which own patents but never use them to manufacture products, are filing a growing number of lawsuits in order to profit from someone else's usage of them.

For tech corporations, the overall cost of committing to and losing legal battles is enormous, even before factoring in the damage to their reputation. Recently, LG Electronics was forced to pay over $45 million to nonperforming business Mondis Technology, the biggest jury award within the last five years.

As per official data, Korean companies were forced to pay an average $15 million in six different verdicts during a five-year period.

According to Chung Yeun-dek, a Konkuk University Law School professor, nonperforming entities seldom file a patent infringement case against enterprises that are experiencing a slow business run. Defendants with a lot of cash flow, on the other hand, will almost certainly pay a settlement to these entities, while only a few plaintiffs are probable to make it to the trial or a verdict.

Last week, a report published by RPX highlighted that the fourth quarter Q4 (of 2021) also witnessed a steady row of operating companies making patent divestments to NPEs, including some that have been linked to prolific and familiar litigants.

Source credit: http://www.koreaherald.com/view.php?ud=20220116000164

Pranali Mehta

A chemical engineer by qualification, Pranali Mehta dutifully walked down the slated path and worked in a chemical firm for a year. Her passion for writing however, pushed her into experimenting with the same as a career. With over three years of experience in content writ Read more...